Microsoft Corp.'s (MSFT) next generation console hasn't even been officially announced yet, but things already took a very ugly turn, with an engineer blasting critical fans. Now one of the top Xbox executives has backpedaled, apologizing for those remarks, although he would not say whether Microsoft was renouncing the anti-consumer digital rights management (DRM) that started the spat.

I. Next Generation Xbox Suffers PR Trainwreck

While it's still too early to say who will win the eight generation of console wars, Microsoft certainly appears the biggest loser in terms of publicity.

Things started off uneventfully in January with the leak of hardware specs, which reportedly is similar to the hardware driving Sony Corp.'s (TYO:6758) officially-announcedPlayStation 4. But Microsoft's PR troubles began soon after when top gaming blogs in February cited complaints from anonymous developers that's Microsoft's early SDKs/dev. kits were clunkier and harder to develop for than Sony's PS4 dev. kits.

Microsoft also dealt with a tell-all exposé by former Windows Sales VP and 20-year veteran, Joachim Kempin. Mr. Kempin claimed to IGN that the Xbox has made almost no money for his former employer. His comments were followed up by critical remarks from another former employee -- this time from the man who named the Xbox, Nat Brown. In a blog entitled "Stupid, Stupid Xbox" the former Xbox team member lambasted the company's console as "creaky, slow, and full-of-s***."

The Xbox 720 has been a PR mess for Microsoft. [Image Source: Explosion]

While the company has refused to confirm or deny the existence of the next-generation console, much less the always-on DRM rumor, a firestorm of criticism has been mounting over the rumor.

II. Microsoft Studios Director to Customers: Deal With It

What about users with slow rural internet connections? Or what if you temporarily had an internet service outage?

Customers have taken to Twitter and other social media outlets to voice their frustration and encourage Microsoft to rethink the rumored decision. That's where things became even uglier when late last week Microsoft Studios creative director Adam Orthy took to Twitter blasting Xbox fans that were criticizing the always on DRM.

Channeling his inner Charlie Sheen he told the fans to "deal with it" via a Twitter hashtag and said he didn't understand why they were upset. He then implied that Microsoft doesn't care about rural users, suggesting that he "[wouldn't] want to live there":

Those remarks led to more hatred and backlash in the social media sphere. NeoWin user Siah1214 wrote, "This guy should be fired. I hope he's fired. He's an idiot."

III. Major Nelson: We're Sorry we Derailed And Said Wrong Things

Now Microsoft has gone on the defensive. Microsoft's Xbox Live Director, Larry Hryb (who goes by "Major Nelson" online) posted an awkward apology to his Major Nelson website commenting:

We apologize for the inappropriate comments made by an employee on Twitter yesterday. This person is not a spokesperson for Microsoft, and his personal views do not reflect the customer centric approach we take to our products or how we would communicate directly with our loyal consumers. We are very sorry if this offended anyone, however we have not made any announcements about our product roadmap, and have no further comment on this matter.

That response did little placate the growing crowd of angry cusomters and retailers, who have issued strongly worded statements about the potential ban on used games.

Major Nelson would not deny that the next-gen Xbox will have always-on DRM and ban used games. [Image Source: Xbox 720 Guide]

On Major Nelson's blog, Xbox Live user "Peter Bauer" writes, "XBOX720 online the whole time= no buy for me, never" and "GoingPostal13" chides Major Nelson, "What you should have done is said: we are not implementing an always online console."

IV. Retails Also Jump Onboard the Microsoft Hate Train

The comments from retailers weren't much friendlier.

An interview roundup by UK gaming blog MCVcarried such several criticisms. Dixons Retail Plc (LON:DXNS) gaming category manager Christopher Rogers complained, "I do not think the UK broadband infrastructure is robust/fast enough for this to be a prerequisite. Surely last month’s teething troubles with SimCity are a warning for this?"

Games Centre managing director Robert Lindsay complains:

If Microsoft incorporates the tech to lock out pre-owned games and Sony doesn’t then there is going to be only one winner in the next generation of consoles – and it won’t be Microsoft.

The publishers are completely out of touch with their consumers if they don’t understand how important pre-owned is in helping them fund new releases. It’s not rocket science to see that a £39.99 new release with no sell-on value will put a massive hole in consumers’ spending budgets.

And Games Dojo Manager Stephen Doyle warned that a ban on used games would "kill the Xbox."

Retailers say a ban on used games would "kill the Xbox". [Image Source: Flickr]

So while Microsoft works to be less offensive on the PR front, it's done precious little to quell the underlying source of criticism. Will Microsoft indeed lock out offline users and ban used games? It's too early to say, but if it's not planning that, it might be wise to issue an official clarification before the Xbox unit suffers more damage to its image.

I'm not saying that Sony did perfect job with PS3, but I don't think they did any worst than MS with current gen. In fact, I prefer what they did.

I don't have "wisdom" to presume my opinion transfers to whole world, so I don't know how many customers were really screwed with cancellation of Linux. My priority for console always was cheaters/hackers free gaming and low price . I got my PS3 once they released slim, which came by default with no Linux. I could get either at the time - slim was just released - but I choose to get simplified one without Linux. Of few dozen PS3 gamers I know among my friends, colleagues and PSN contacts, no one ever complained about losing Linux. Most vocal complains came from people like that Geo... kid and others from hacking community, and while I don't care what anyone does with his console, I do care when what some do has potential to damage my experience, so personally I greeted that move.

Sony was making - for a while, at least - both PS2 compatible and non-compatible consoles, and buyers decided they want their PS3 cheaper. If there was more interest for compatibility, I'd expect it to stay around, for a price. Those Ps3 consoles that were compatible never lost compatibility, to my knowledge.

But Sony also provided decent BD player, while MS was trying to convince their customers that their might will make HD-DVD successful, leaving number of them with useless paper weight called HD-DVD player. I'm wondering if number of customers with useless (and not cheap at all) HD-DVD is higher than number of customers who really cared for Linux on PS3. I wouldn't be surprised if it is.

Sony also offered better build quality hardware. Number of hardware faults on PS3, again to my knowledge, was significantly lower than RROD issue that plagued X360 before slim.

Last but not least, while PSN was not as sophisticated as Live, it did have major advantage for many - online gaming was free. For people who purchased console primarily for gaming - me included - this was significant advantage.

Different people, different priorities; but as much as I am concerned, looking back at 4 years of owning PS3, I am really happy for choice I made.